TIDMPMK
Interim results for the six months to 30 June 2010
PLUS Markets Group plc ("PMG" or the "Group") reports its interim results for
the six months to 30 June 2010.
Financial highlights
* Revenues at GBP1.53 million (2009 - GBP1.49 million) on administrative expenses
of GBP4.03 million (2009 - GBP7.38 million).
* Loss before depreciation, amortisation, impairment and interest received of
GBP2.54 million (2009 - GBP5.85 million). Loss after depreciation,
amortisation, impairment and interest of GBP2.48 million (2009 - GBP5.71
million).
* The Group has no debt and retained a cash balance of GBP9.73 million (2009 -
GBP10.26 million) as at the balance sheet date.
Commenting on the interim results, Chief Executive Officer Cyril Théret said:
"PLUS Markets has embarked on a radical and aggressive strategy to transform
itself. We have made some clear decisions about the future direction of the
Company. We now seek to broaden our services and products to both the small and
mid-cap sector and a wider group of users in order to generate revenues and
greater future value."
For further information, please contact:
Cyril Théret / Nemone Wynn-Evans 020 7553 2000
PLUS Markets Group plc
Nick Westlake (Nominated Advisor) 020 7260 1000
Charles Farquhar (Corporate Broker)
Numis Securities Ltd
John Parry 020 7490 8062
Rostron Parry (PR Enquiries)
Chairman's statement
This is the first set of results under the new management team which took
office in February 2010. The new team embarked on a radical and aggressive
strategy to turn PLUS Markets Group plc from a reporting venue into a
fully-fledged competitive stock exchange for London, providing listing and
execution services in cash equities and derivatives.
During the period, the management team have been extremely busy establishing a
clear direction for the exchange based on customer requirements. The outcome of
this work, if successfully implemented, will transform the position of the PLUS
stock exchange.
Key highlights of this work included:
* reducing the cost base by 40% to annual level of below GBP5 million from
2011;
*
+ headcount reduction from 52 to 28 generating savings of over GBP1m on an
annualised basis;
+ notice given on the existing Facilities Management Agreement, reducing
technology infrastructure costs from over GBP2 million p/a to under GBP0.5
million p/a projected for 2011 for the in-house built quote and trade
reporting facility.
* completion of strategic review on 25 August 2010;
* new technology offering providing market making, bilateral and multilateral
electronic execution services; and
* proposed launch of new products: corporate bond product for small and mid
cap, retail execution services, and PLUS Derivatives Exchange.
The Board now have a clear focus on driving the Group to profitability within
two years.
Financial performance
The first half of 2010 saw continuing difficult market conditions, particularly
in respect of low Initial Public Offering ("IPO") activity on the PLUS-quoted
market. The market held steady with twelve new companies admitted during the
period (2009 - 12) while 17 left (2009 - 24), resulting in 174 companies on the
market at the period end.
Sales in real-time products and other services remained unchanged in a muted
environment. In March, PLUS launched a fixed income trade reporting service,
increasing the variety of products for retail investors on the exchange.
Revenues in the first six months increased slightly to GBP1.53 million (2009 - GBP
1.49 million), on administrative expenses of GBP4.03 million (2009 - GBP7.38
million).
Trading activity
Retail trading activity reported on PLUS remained healthy, with a 44% increase
in value traded as against the same period last year (2010 - GBP43.1 billion;
2009 - GBP29.9 billion), although the number of bargains declined (2010 - 3.6
million; 2009 - 5.1 billion), in line with declining volumes across the sector.
This is an activity from which the exchange intends to generate revenues in the
future.
Market conditions
The cash equity markets remain uncertain with a general lack of IPOs and
falling equity volumes, leading to consolidation of the sector, including
Multilateral Trading Facilities ("MTFs"). The exchange's marketplace continues
to evolve rapidly post-MIFID, while investment firms face new challenges and
seek to reduce operational and systemic risks.
The change of UK government in May resulted in HM Treasury launching new
consultations that are directly relevant to PLUS, relating to the City
regulatory framework and the important role of the private sector in economic
recovery. The PLUS stock exchange welcomes focus on the importance of funding
Small and Medium sized Enterprises ("SMEs") in a credit-constrained
environment, as outlined in the Green Paper "Financing a Private Sector
Recovery".
Future plans
Against this backdrop, as recently announced, the Group is broadening its
offering to our customers, while seeking to build a sustainable revenue base.
* SME offering - PLUS continues to increase the profile of its issuers
through the commissioning of equity research from Edison Research and
holding regional roadshows across the UK. Sales initiatives across the Far
East and Middle East regions are ongoing, as they offer better IPO
prospects. Our current offering will also be enhanced by a new corporate
bond product;
* Retail execution services -,PLUS plans to improve its offering through an
RSP hub based on a Request For Quote ("RFQ") model providing best
execution, single fill and price improvement opportunities to retail
investors.
* PLUS Derivatives Exchange ("PDX") - PLUS intends to launch a new range of
interest rate swap products, providing efficient access to full
fixed-for-floating rate interest exposure through the FTSE MTIRS (Medium
Term Interest Rate Swap) Index Series. This will initially be through an
over-the-counter ("OTC") cleared service, developing subsequently, subject
to market demand, into a new exchange-traded product known as an
Exchange-Traded Index ("ETI"), listed and traded on PLUS.
* Proposed new trading platform - PLUS intends to launch a new lit book
(order book) in 2011, subject to funding of up to GBP10 million from
potential users, using next generation platform technology provided by Algo
Technologies Ltd.
Board changes
As PLUS Markets rolls out its new developments and new initiatives, it will
continue to review the shape and composition of its Board to meet new
challenges and opportunities. Stephen Allcock, Non-Executive Director, stepped
down from the Board on 14 September 2010, following over four years' service to
the Company, and we are grateful for his valuable contribution. We are seeking
to replace him as soon as possible. Also, Simon Brickles has decided to
relinquish the post of Vice Chairman and left the Board on 14 September 2010;
therefore this role will no longer exist. The Board recognises the work he has
undertaken over many years in helping formulate and promote London's equity
markets in support of smaller companies and wishes him well for the future.
Outlook
The result of all the above activity is to give a clear understanding to both
our customers and shareholders as to the company's direction, in what is widely
acknowledged to be a difficult environment. We do not underestimate the
challenges that we face but the speed of change in the company already
indicates we are prepared to fulfil the role of a truly competitive stock
exchange.
Giles Vardey
Chairman
15 September 2010
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2010
Note Six months Six months Year ended 31
ended 30 June ended 30 June December 2009
2010 2009 Audited GBP'000
Unaudited GBP Unaudited GBP
'000 '000
Continuing Operations
Revenue 1,528 1,491 3,038
Administrative expenses 2 (4,031) (7,379) (11,563)
(Charge)/credit in relation to (32) 40 91
share-based payments
Loss before depreciation, (2,535) (5,848) (8,434)
amortisation and impairment
charge
Depreciation and amortisation (12) (26) (40)
Operating loss (2,547) (5,874) (8,474)
Finance income 65 162 218
Loss on ordinary activities (2,482) (5,712) (8,256)
before taxation
Taxation - - -
Loss for the period (2,482) (5,712) (8,256)
attributable to equity holders
of the parent
Loss per share
Basic (0.64)p (1.81)p (2.37)p
Diluted (0.63)p (1.77)p (2.33)p
There were no other items of comprehensive income in the period or comparative
period.
Condensed Consolidated Statement of Financial Position
As at 30 June 2010
Note As at 30 As at 30 As at 31
June 2010 June 2009 December
Unaudited GBP Unaudited GBP 2009 Audited
'000 '000 GBP'000
Non-current assets
Property, plant and equipment 11 35 21
11 35 21
Current assets
Available-for-sale investments - 1 -
Trade and other receivables 1,122 1,454 1,027
Cash and cash equivalents 9,728 10,256 10,744
10,850 11,711 11,771
Total assets 10,861 11,746 11,792
Current liabilities
Trade and other payables (1,243) (2,098) (566)
Provisions 3 (177) - (177)
Deferred income (898) (979) (56)
(2,318) (3,077) (799)
Net current assets 8,532 8,634 10,972
Net assets 8,543 8,669 10,993
Equity
Share capital 19,345 15,828 19,345
Share premium account 18,021 16,616 18,021
Retained deficit (28,823) (23,775) (26,373)
Equity attributable to equity 8,543 8,669 10,993
holders of the parent
These financial statements were approved by the Board of Directors and
authorised for issue on 15 September 2010.
Signed on behalf of the Board of Directors
Giles Vardey
Chairman
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2010
Six months Six months Year ended 31
ended 30 June ended 30 June December 2009
2010 2009 Audited GBP'000
Unaudited GBP Unaudited GBP
'000 '000
Net loss from operating activities (2,547) (5,874) (8,474)
Adjustments for non cash items:
Depreciation of property, plant and 12 26 40
equipment
Profit on disposal of - - (2)
available-for-sale investment
Share-based payment expense/(credit) 32 (40) (91)
Operating cash flows before (2,503) (5,888) (8,527)
movements in working capital
(Increase)/decrease in trade and (95) 156 583
other receivables
Increase/(decrease) in trade and 1,519 907 (1,371)
other payables
Net cash used in operating (1,079) (4,825) (9,315)
activities
Investing activities
Interest received 65 162 218
Purchase of non current assets (2) (6) (6)
Net cash generated by investing 63 156 212
activities
Financing activities
Net proceeds from issue of equity - 94 5,016
shares
Net cash generated by financing - 94 5,016
activities
Net decrease in cash and cash (1,016) (4,575) (4,087)
equivalents
Cash and cash equivalents at 10,744 14,831 14,831
beginning of period/year
Cash and cash equivalents at end of 9,728 10,256 10,744
period/year
Condensed Consolidated Statement of Changes in Equity
Unaudited for the six months ended 30 June 2009, audited for the year ended 31
December 2009 and unaudited for the six months ended 30 June 2010.
Share Share Retained Total GBP
capital GBP premium GBP earnings GBP '000
'000 '000 '000
Attributable to equity holders of 15,734 16,616 (18,023) 14,327
the parent at 1 January 2009
Shares issued - Options exercised 94 - - 94
Reversal of share based payment - - (40) (40)
credit
Loss for the half year - - (5,712) (5,712)
Attributable to equity holders of 15,828 16,616 (23,775) 8,669
the parent at 30 June 2009
Attributable to equity holders of 15,734 16,616 (18,023) 14,327
the parent at 1 January 2009
Retained earnings of dormant - - (3) (3)
subsidiary disposed of in the year
Shares issued - Options exercised 94 - - 94
Shares issued - Placing 1 October 3,517 1,405 - 4,922
2009
Reversal of share based payment - - (91) (91)
credit
Loss for the year - - (8,256) (8,256)
Attributable to equity holders of 19,345 18,021 (26,373) 10,993
the parent at 31 December 2009
Attributable to equity holders of 19,345 18,021 (26,373) 10,993
the parent at 1 January 2010
Reversal of share based payment - - 32 32
charge
Loss for the half year - - (2,482) (2,482)
Attributable to equity holders of 19,345 18,021 (28,823) 8,543
the parent at 30 June 2010
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2010
1. Accounting Policies
General information
PLUS Markets Group plc ("the Company") is a company incorporated in the United
Kingdom under the Companies Act 2006. The Company's principal activity is that
of a holding company, owning 100% of PLUS Markets plc, which is engaged in the
operation of the PLUS market and is authorised and regulated by the Financial
Services Authority. These condensed consolidated financial statements are
presented in Pounds Sterling because that is the currency of the primary
economic environment in which the Company and its subsidiaries (together "the
Group") operate.
Basis of accounting
The condensed consolidated financial information contained within these
financial statements, which are unaudited, has been prepared using accounting
policies consistent with International Financial Reporting Standards ("IFRS")
as adopted by the European Union. This condensed consolidated financial
information should be read in conjunction with the statutory accounts for the
year ended 31 December 2009 which were prepared in accordance with IFRS as
adopted by the European Union. The same accounting policies, presentation and
methods of computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited financial
statements. In the current financial year the Group has not adopted any new
IFRSs. While the financial figures included in this half-yearly report have
been computed in accordance with IFRS applicable to interim periods, this
half-yearly report does not contain sufficient information to constitute an
interim financial report as that term is defined in IAS 34. There is no
requirement for AIM companies to prepare their half-yearly reports in
accordance with IAS 34.
The information for the year ended 31 December 2009 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The auditor's report on those accounts was not qualified, did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying the report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006. The condensed consolidated
financial statements are prepared under the historical cost convention, with
the exception of investments which have been fair valued under IAS 39.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those of estimates.
Intangible Assets - Internally Generated
An internally generated intangible asset arising from the group's activity to
acquire regulatory licences and deploy leading edge trading and surveillance
technology is recognised as an intangible asset only if all of the following
conditions are met:
* an asset is created that can be identified (licences and technology);
* it is probable that the asset created will generate future economic
benefits; and
* the development cost of the asset can be measured reliably.
Where no internally generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.
In the six months to 30 June 2010 development costs totalling GBP70k did not
fulfil all three of the above criteria. The development costs have therefore
been expensed.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the balance sheet date, taking
into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Going concern
The Directors continue to adopt the going concern basis in preparing the
condensed consolidated financial statements for the period ending 30 June 2010.
At the balance sheet date the Group held GBP9.7 million cash on a range of short
term deposits at three different banks. In the light of the Group's reduced
operating cost base the Directors have formed a judgement at the time of
approving these financial statements that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for
the foreseeable future. The Group is required to maintain a level of regulatory
capital as a Recognised Investment Exchange, which it continues to meet, and
the Directors will continue to monitor the adequacy of the regulatory capital
headroom.
2. Administrative Expenses
Administrative expenses in the six months to 30 June 2010 include GBP0.07 million
in respect of expenditure on development of the new trading platform.
3. Provisions
The provision for non-reclaimable VAT represents VAT claimed on developments to
the trading platform to enable it to accommodate electronic matching of trades,
which is an exempt supply for VAT purposes. The amount provided represents 100%
of the VAT claimed and is subject to agreement by HMRC, which agreement has
been sought.
Independent Review Report to PLUS Markets Group Plc
We have been engaged by the company to review the condensed consolidated set of
financial statements in the half-yearly financial report for the six months
ended 30 June 2010 which comprises the income statement, the balance sheet, the
cash flow statement, the statement of changes in equity and related notes 1 to
3. We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the AIM Rules of the London
Stock Exchange.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report have been prepared in accordance with the accounting policies the group
intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated set of financial statements in the half-yearly financial report
based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the
half-yearly financial report for the six months ended 30 June 2010 is not
prepared, in all material respects, in accordance with the AIM Rules of the
London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom
15 September 2010
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
END
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